Despite of introduction of new graphics processing units (GPUs) by both ATI, graphics product group of Advanced Micro Devices, Nvidia Corp., average selling prices (ASPs) for desktop discrete graphics cards were down in Q3 2008. Nevertheless, unit shipments increased noticeably, which is a good news for both companies.

After finishing analysis of last quarter for the graphics add-in board (AIB) market, Jon Peddie Research (JPR) reports that unit shipments increased 11% (sequentially) to 21.9 million, elevated by major introductions of new graphics technologies and products. Nevertheless, ASP of a graphics board dropped by about 5% during Q3 2008, which is why market value increased to only about $3.8 billion and is 27% lower compared to Q3 2007.

Jon Peddie Research notes that ATI/AMD has by all accounts exceeded expectations with its ATI Radeon HD 4000 series. The new graphics boards are priced aggressively, but still deliver solid performance, which allowed ATI to increase its share on the market of discrete desktop GPUs to 40% from 35% in the prior quarter. Nvidia and its partners did not want to surrender without a fight and had to drop the prices on the GeForce GTX 260 and 280 graphics cards, a move that not only affected ASPs for the quarter, but also reduced Nvidia’s profitability.

In an earlier report the market research firm said that rapid expansion of notebooks and netbooks are to blame for the weakness of desktop graphics adapters overall. But even though the demand towards mainstream graphics cards declined in Q3 2008, more expensive offerings became more popular than in the same period last year.

“The loss in discrete sales was primarily in mainstream add-in boards (AIBs) due to overall market expanse driven by lower cost PCs and the use of integrated graphics processors (IGPs). In the Performance segment the shipments were about the same, Enthusiast was up almost 3x, and workstation was up 1.5x,” said Jon Peddie in an interview with X-bit labs in late October.

Considering the fact that shipments of premium-class graphics boards – from the enthusiast and professional segments – were on the rise and supplies of performance graphics cards stayed flat during the quarter, it seems that ASPs were significantly influenced by rapidly dropping prices on mainstream and entry-level components and not only the price-war in the higher-end segments.

Tags: AMD, ATI, Nvidia, Geforce, Radeon, JPR